Market discounts rate cut hopes, Sensex plunges 151 points

Mumbai: Brushing aside rate cut hopes rekindled by lower inflation and positive IIP data, the benchmark BSE Sensex on Tuesday retreated from a two-week high by falling over 150 points to 25,705.93 on weak global cues ahead of the U.S. Fed rate decision on Thursday.

Sentiment took a hit largely on a weak trend at other Asian markets, with the Shanghai Composite index breaking below the symbolic 3,000-mark, which contributed to the fall. Investors were also worried over a crackdown on illegal trading, brokers said.

Meanwhile, government data which came out after trading hours on Monday showed retail inflation fell to a new low of 3.66 per cent in August. Even WPI inflation eased further to (-)4.95 per cent in August. The data raised expectations that the Reserve Bank of India would cut interest rates for the fourth time this year at its policy review due on September 29.

The 30-share BSE index after shuttling between 25,909.83 and 25,649.37 during the session finally settled lower by 150.77 points, or 0.58 per cent, at 25,705.93. The gauge had gained 246.49 points in yesterday’s session.

The NSE Nifty too edged lower by 43.15 points, or 0.55 per cent, to end at 7,829.10. Intra-day, it cracked the 7,800-mark to touch a low of 7,799.75 and a high of 7,880.00. Tata Steel suffered the most among Sensex constituents by falling 5.08 per cent, followed by Vedanta (4.06 per cent).

Others that declined include Tata Motors, L&T, Hindalco, Axis Bank, M&M and Hero MotoCorp, among others. Bucking the trend, Maruti Suzuki ended 0.25 per cent higher at Rs 4,330.95 after the Reserve Bank allowed foreign investors to pump in up to 40 per cent of the paid-up capital in the company. Intra-day, it soared to the day’s high of Rs. 4,415.70.

Other gainers were Sun Pharma, ITC, Hind Unilever, NTPC, RIL, Lupin and ONGC, which helped indices recover a bit from the session’s lows. Of the 30 Sensex stocks, 23 ended lower while 7 ended in the positive zone. In line with the overall trend, selling pressure also emerged in the broader market, with mid-cap and small-cap indices falling up to 0.77 per cent.

On the global front, Shanghai Composite fell 3.52 per cent while Hong Kong’s Hang Seng shed 0.49 per cent. European markets too were down in their early trade amid concerns about growth prospects in China and Germany before the upcoming Fed policy review meet.